Eastman Chemical Splits Stock - Analyst Blog
August 08 2011 - 12:51PM
Zacks
The plastics
and chemicals maker Eastman Chemical
Co. (EMN) announced that it will
increase the payout to its shareholders. The Kingsport-based
company declared a 2-for-1 stock split and increased the quarterly
cash dividend by 11%.
Eastman
announced that it will pay a dividend of 52 cents per share on a
pre-split basis. The stock split will be in the form of a 100%
stock dividend to be distributed on October 3, 2011 to stockholders
of record as of September 15, 2011.
New shares
issued from the stock split will be given to shareholders on
October 3, 2011. Shareholders will be given one additional share
for each share held.
Eastman’s
common stock will begin trading on a split-adjusted basis on
October 4, 2011.
These
actions taken by Eastman demonstrate its financial strength.
Recently the company declared its results for the second quarter of
2011. The company reported second-quarter earnings of $2.76 per
share, compared with $1.95 per share, a year earlier and beating
the Zacks Consensus Estimate of $2.60 per share.
With sales
improving across all product lines, revenues climbed 26% year over
year to $1.9 billion, driven by higher sales volume and increased
selling prices and outpacing the Zacks Consensus Estimate of $1.8
billion.
The higher
sales volume was attributed primarily to growth in plasticizer
product lines, increased demand for acetyl chemicals, the fourth
quarter 2010 restart of a previously idled olefins cracking unit at
the Texas facility, and stronger end-market demand especially in
the packaging, transportation, and durable goods markets. The
increase in selling prices was resulted from higher raw material
and energy costs.
Based on the
strong first half 2011 results, the company expects to continue to
deliver earnings growth in the second half of 2011.
The results
for the second quarter were driven by strong sales volumes and
higher prices and Eastman expects the trend to continue into the
third quarter as well. It expects to incur costs related to planned
and unplanned shutdowns that are expected to be approximately $25
million higher in the second half of 2011 compared with the first
half.
Even with
these higher costs, Eastman anticipates third-quarter 2011 earnings
per share to be slightly higher than third-quarter 2010 earnings
per share of $2.22 and expects full-year 2011 earnings per share to
be slightly higher than $9.25.
Eastman
Chemical’s diversified chemical portfolio, along with its
integrated and diverse downstream businesses, is driving earnings.
Eastman benefits from business restructuring and cost-cutting
measures. The company has sold unprofitable units and closed down
poorly performing ones.
The company
however, faces volatility in raw material and energy costs, higher
pension expenses and other growth-related costs.
Eastman
competes with large multinational companies such as
Celanese
Corp. (CE) and
The Dow
Chemical Co. (DOW) and
EI
DuPont de Nemours & Co. (DD) across its major business
segments.
CELANESE CP-A (CE): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis Report
DOW CHEMICAL (DOW): Free Stock Analysis Report
EASTMAN CHEM CO (EMN): Free Stock Analysis Report
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